From trash can business to international success concept

“When I was hired at the time in 2000, there was a sweet girl in the company. And we became lovers relatively quickly and really happy for each other. However, she also turned out to be the owner's daughter. Once there is love, it's damn hard to stop it. All rationality just disappears”.

The girl's name was Cathrine. And in the beginning, the two tried to keep the love secret. But in a small business where people like to know the most about most, it eventually became a challenge:

“Back then, it was extremely expensive to talk on a mobile phone when you were abroad. We kept our relationship a secret at first. But then at one point, there was someone who became suspicious when they could see I had called home for several thousand kroner for the same number”.

So Christian and Cathrine let go of the norms and let love mingle with the garden furniture. A choice they have not regretted.

"Now you are allowed to try, but I do not think you can"

Eight years into what turned out to be the father-in-law's furniture company, a 'yes' from his beloved Cathrine and a son and a daughter later, something happens again that turns out to be a landmark part of Christian and Cathrine's now common history. The well-known Lars Larsen buys half of his father-in-law's company and asks him to focus exclusively on garden furniture. To the left, there was now a "very small department that made sofas", which had to be closed down. And Christian and Cathrine would like to take over:

“Lars Larsen bought half of the company, and the sofa department, which was not part of the core business, actually had to be closed because it was a pure loss-making business. We asked if we could try it. And that is what later became SofaCompany”.

Although the small sofa section was to prove to be the first sod for a huge success, the father-in-law's enthusiasm for the young couple's proposal could lie in a very small place, Christian remembers: "'Now you are allowed to try, but I do not think you can.', he said. For 1.5-2 years he was right, but then it started to turn around. There I became stubborn because I am a competitive person”.

The father-in-law also made it clear to his daughter and son-in-law that it has certain risks to become self-employed. Because you can not just return as an employee once you have smelled the freedom as a gentleman in your own shop:

“SofaCompany has been a success because we have dared to seize a lot of opportunities. Some have become something, and some have not, ”explains Christian, fully aware of the risk that also lies in seizing opportunities and ideas as soon as they appear. The couple had to shut down in Malaysia because the market was not as they thought and they did not have the right man in the field. In South Africa, it went really ok, but the distance both in kilometres and culture made it another market that the couple had to find another set-up for, but they still with the feeling of having seized the opportunity. And the couple felt grateful. They came from a pure BtB market, where they only sold to large furniture chains, and now that they sold directly to the consumer, they made a much bigger profit on their sales:

"I think it was an advantage that we came from the B2B part because we were used to some completely different margins than the BtC part can actually throw off. So when we went up, and we had it directly from our own factory, we were happy long before our competitors were happy. They were to have a larger margin, for there was also a factory to profit from its agents' expensive rents and a large overhead. We could live with a much smaller margin”.

At home in Denmark, the trend of buying furniture online was maturing, and the concept of physical showrooms and online purchases seemed to be a combination that many consumers understood. The goal was not to hit everyone's tastes and preferences, but a high level of knowledge should form a breeding ground for exploiting the enormous market potential: “It was not our goal that everyone should buy their sofa from us, but all people should consider buying it from us - and that success criterion we achieved ”. A knowledge that was also helped along the way by the sense of design - and not least expensive design, which the couple mastered: "We have always been good at making it look more expensive than it is", as Christian says.

“The business was running, and I hired directors for the administration, so I could think a little long-term and unfold the concept. We could kindly finance it ourselves, but you are also a young family. So even though we believed in the project and the future, we wanted to take a stab at the table and at the same time share the upside and risk with an owner who could contribute to the journey ”.

While the business and thoughts were running, Christian got in touch with corporate finance advisor Clearwater. Here he found out that the company certainly had potential for the investors, but that there were some areas where the company had to put in before going into an actual sales process:

“I talked to Clearwater for a period of over a year and a half. When we had the first considerations, we were not ready - neither at the organisational nor the reporting level. So I had to go out and find the right people who could also set up the reporting that allowed us to provide the data a buyer would expect. Clearwater was good at this and followed up on it, and it has had great value for us”.

In the process, Christian became aware of private equity funds as potential buyers and partners. An opportunity which he otherwise would not have given the big thought to since the interested buyer knocked on some years before:

"Basically, we had two success criteria: We had to have some money off the table and find someone who could run it further. It was Clearwater that brought private equity funds to the fore. I basically did not care if it was a private equity fund or an industrial buyer, but I had heard bad stories about private equity funds, and therefore Cathrine and I were a bit reticent and needed to be convinced ", Christian remembers.

Now Cathrine and Christian could really see the value in the private equity fund's determined focus on Science, and how it was expressed in the daily operation of the company. But that did not dominate the couple's drive - the well-developed focus on Art. Before the sale, the two had made it clear that it was crucial for them that resources were also set aside to develop the brand - in fact so crucial that the actual choice of private equity fund was based on exactly that desire: "Cathrine and I chose the private equity fund on the basis that something had to be done about our brand. There they respected our results and were open on the Art part, just as we respected the Science part. Money was set aside to develop the brand, and we were listened to and respected, ”says Christian.

After a few years, it was as if "the pieces fell into place". The right team was set and fallen to and a common formula was found. Cathrine and Christian were able to retire completely from day-to-day operations but remained on the board. However, the transition was not so sharp for Christian, who had already sometime before prepared his retirement from the company:

“I had already distanced myself a little bit in the years before and hired two COOs for the two divisions that were. So when the private equity fund came in, I said pretty quickly that I did not want to be CEO with the reporting need and the degree of detail that came with it, and which was significantly more extensive than what I feel like and am good at. So one of the two COOs was promoted to CEO of the entire group and he is still the CEO of SofaCompany today. I had actually decided that this was how it should be”.

Because Christian had set himself on a new everyday life, he enjoyed the freedom, which was again to be able to focus on being creative, coming up with business proposals and "being free from the CEO duties". It was also here that Sofakompagniet exchanged the Danish name with the international SofaCompany, which had already been the name for many years in the countries in which the couple also sold.

And probably there was an imbalance between the hardcore calculations and the gut feeling, but paradoxically, there was still room for Christian's alternative form of Science: “In the B2B part, I converted it all into containers. It does not last long. When we sold to Procuritas, we had to count in kroner and øre, but the funny thing is that now we are back in counting in containers, because the volume has become so large ”, Christian remarks with a smile.

And if you ask Christian why he did not upgrade the Science part before the sale in order to increase the company's sales price, the answer is very simple: “We had the finances for it, but had reached a limit for our willingness to take risks, and at the same time stood we faced some big choices where we could also use some strategic sparring. At the same time, we had everything we owned tied up in that business, so we could choose to grind the diamond to increase the selling price or sell the rough diamond and let others help us grind it - someone who had tried it before. For us, the choice was simple at the time. But yes, another time I know what I need to do to increase the value before a sale, but back then it was definitely the very best option for us to go with the private equity fund. And I'm glad Clearwater advised us on that, ”

"Can't you talk about anything but sofas?"

During the young and busy years in her father-in-law's furniture company, Cathrine and Christian also managed to become parents to their two children. A son and a daughter who are 16 and 14 today. Most parents of young children can probably nod in recognition of the pressure of juggling a daily routine with internships, expectations, poor sleep and a full-time job. For the couple, there was just also a growing business on top of that, where two days were not similar to each other, and where either one or both were often out travelling. And it has of course had an impact on family life, Christian admits: “Our children have probably suffered a little that there has not been so much time. When we went on vacations, they asked if we could not stop talking about sofas. But then we had to explain that it was the sofas that allowed us to go on vacation. They have not suffered any damage at all, but when both father and mother are busy and travelling, then it is difficult. But then they have experienced some other things”.

But what is it like to let go of what you have been fighting for since you were very young, and which has given you good holidays but also sleepless nights - now not just partially but completely? Christian has a completely pragmatic attitude to this, which stems from a sharp realisation that you should only continue as long as you are the right person for the task. That you can create a successful concept and release it again so that it can live on and grow even bigger in the right hands:

"Something better comes out of passing it on to someone who has experience. Now we have again sent it on to Jysk, who also has experience in it and courage in it and money for it. It warms that it lands in such a place. The concept from 2012 still holds and continues in its own form, and I actually think that it can become a really big Danish furniture export success. It has all the qualities to it and they are not afraid to invest in doing it. So it could be fun ”.

When it comes to the emotional in letting go, Christian has the same pragmatic approach when many ask wondering if one can say goodbye to something that has required so much effort that it almost gets the status of a third child. To that, Christian says with exalted calm that “I have two children at home, and I would never sell them. SofaCompany has always been a project for us and we have not been afraid to do something about it and take some chances. If it's going wrong, what then? Then we just try something else. We have not been overprotective. But I never saw it as a child. Therefore, it has not been difficult for me to sell either. It is completely natural”.

But it has always been crucial for Christian that he could feel the chemistry and not just an interest in finances. And even though this time it was a total sale, he was happy that the ring ended with some people with whom he and Cathrine shared values:

"What has been really important for someone like me is that I can with the people I trade with. Like when we chose Procuritas, it was not them who bid the most, but they were the ones we had the best chemistry with, because we thought that we should work with them here for the next five years, so it is important that we work together and have the same set of values. And so it was when we chose Clearwater to be in charge of the first sale - it must be someone who appeals to one. Everything is not just money”, it is important for Christian to state.

Cathrine and Christian's sofa adventure - and especially the beautiful ending to it - sounds to most mortals impressive and a bit like a game. But make no mistake. Christian is aware of what it has cost victims along the way - and what he would have liked to have been in addition to himself and his family:

“When it looked like all sorts of tests, we had to move to Vietnam to be closer to production and be able to save some employees. But the children did not fall for it, so Cathrine had to go home with them. So there I was in Vietnam with a huge debt and could not go home to my family", Christian recalls.

But in that warning, there is also a strong call from Christian to other entrepreneurs. Because it is "healthy to make your own money", and even though you have a perhaps slightly alternative approach to business, which is not based on KPIs, reporting methods and Excel sheets, you can drive it far with a good gut feeling and courage to seize the opportunities when they are there:

“There are entrepreneurs like us. We are not necessarily stupider than other people's children just because we have a different approach to business. It is important for me to pass on to others like us. But you can not be driven without it.", Christian concludes.